I'm the Detroit bureau chief for Forbes, which means I spend most of my time covering the automotive industry. But I also keep an eye on the rest of America's heartland—where stuff is manufactured and grown. I've been on the auto beat for more than 20 years at Forbes, Business Week and the Detroit Free Press. At the Boston Globe, I rode the tech bubble for a while, but I found there's nothing quite as fun as the auto beat. Whether you drive a car or not, everyone has an opinion about cars or car companies. What's yours?

5/03/2012 @ 3:37PM2,087 views

OnStar Mirror: When Only a Human Will Do

General Motors‘ OnStar subsidiary, which is trying to boost sales to non-GM owners, is borrowing a page from the wireless industry by slashing the price of its hardware — in this case, a rear-view mirror, not a mobile phone — with the purchase of a long-term service contract.

For a limited time, OnStar FMV (which stands for For My Vehicle) will be available for $99 at participating electronics retailers, including Best Buy. Subscriptions start at $199 per year for basic emergency response service, or $299 for Directions and Connections, which includes turn-by-turn navigation and other premium features.

“We’re still trying to figure out the right marketing strategy” for aftermarket sales, explained Vijay Iyer, a spokesman for OnStar, which has more than 6 million GM subscribers in the U.S, Canada and China. After initially keeping OnStar proprietary, GM last year started selling OnStar FMV as a $299 accessory at Best Buy and other retailers. The $99 promotion, which waives the standard $75 installation fee, runs May 6 through June 16. Together with a Directions and Connections service plan, that equates to $1.09 per day, less than the average cup of coffee, according to OnStar.

Of course, OnStar’s biggest marketing challenge is that most cars today already come with bells and whistles like Bluetooth connectivity and navigation systems. So I was particularly surprised by some data that OnStar disclosed about the first 30,000 buyers of its FMV mirrors.

According to OnStar, 23 percent of car owners who had an Onstar FMV mirror installed in their car owned a practically new 2011 or 2012 model. “We find this statistic to be very telling,” said Terry Inch, OnStar’s vice president of sales, marketing and business development. “The majority of these newer vehicles have some form of built-in navigation or telematics system, yet these drivers still see OnStar’s suite of safety and connectivity services as a must-have.”

Toyota owners were the biggest purchasers of OnStar FMV, accounting for 15.6 percent of sales, followed by Ford owners at 12.3 percent. Here’s what’s really interesting: More than 30 percent of the Ford owners who installed OnStar FMV had Ford’s Sync in-car entertainment system available as an option when they purchased their vehicles. Now, do the math and we’re only talking about 1,100 or so Ford cars. But I find it curious that anyone would choose to put a competitor’s after-market system in their new car rather than checking the box for the factory-installed system when they ordered their car.

I doubt price is the reason. Ford recently cut the price of Sync installation to $295, and a Sync Services subscription, which adds turn-by-turn navigation and live traffic reports to its basic voice-controlled entertainment features, is just $60 a year. Even before the price cut, Sync was $395 and came with a free three-year subscription to Sync Services. For 2013 models, Ford is rolling out its more advanced in-dash system, called MyFord Touch. While it’s more expensive (about $1,000) it, too, comes with a free three-year subscription.

Maybe it’s because MyFord Touch has been criticized for being overly complex. It’s a lot easier to push a little blue OnStar button and ask a human for help than to toggle through multiple screens on the instrument panel. But MyFord Touch is still relatively new. An aversion to that system doesn’t explain why buyers of 2011 and 2012 Ford models would opt for OnStar.

It could simply be that OnStar’s “Real Calls” advertising strategy, emphasizing safety in a dangerous world, resonates with consumers. When you hear those frantic calls for help on the radio, and the reassuring voice of the OnStar operator, it’s hard not to be moved.

Still, I remain unconvinced that there’s a very large market for OnStar FMV, given that so many cars are now available with many of the same services. It’ll be interesting to see how this business develops. You can’t blame GM for trying.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

I think one of the biggest draws of the OnStar system is that in a world where we are surrounded by technology and automation we crave a human connection. How frustrating is it to try and enter an address in the GPS and be unable to find it? With the human interaction not only can you work around this without starting over you also have someone to share that frustrating with. It’s simplicity is also its strength. My mother used to say, K.I.S.S., or “Keep it simple stupid.”